The investment bank hiked its expectations for the trajectory of the benchmark note, projecting yields hitting 4% by 2016, largely based on an improving U.S. economy, an anticipated winding down of the Federal Reserve’s bond-purchase program, and fewer systemic risks in the euro zone, according to Goldman’s Francesco Garzarelli.

Given the Fed’s monetary-policy outlook, Goldman also sees a range of 2.75% to 3% by the start of 2014. That puts Goldman’s forecast at the high end of a recent MarketWatch survey of fixed-income strategists about where they see the 10-year yield ending the year. But perhaps it’s not surprising Goldman expects a faster climb in rates considering it was the one calling for yields to rise back in April, when the Treasury yield was close to its 2013 lows.

Interestingly, Goldman did not raise its forecasts for other government bond markets, meaning the difference between Treasurys and European and Japanese government bonds is expected to grow. Widening yield spreads between U.S. bonds and German bonds can indicate diverging growth outlooks.

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